Start Trading with Confidence: UK's Best Forex Brokers for Beginners

Finding a regulated FX broker is important to ensure the platform has been vetted for safe financial practices. In the UK, FCA authorisation assures that your funds are in reliable hands within the Forex broker account.

As per the regulations, licensed forex brokers must segregate customer funds, which means they are kept separately from other business funds. This means that should the company go bankrupt, the client funds will not be affected.

Regulated Forex brokers must also have employees trained to work in the financial sector and understand money markets. Proper bookkeeping and accounting are required by licensed forex brokers, which ultimately aims to minimise the chances of client money loss.

Beginner traders would want to learn the basics of trading currencies to increase their chances of profiting. Ideally, for beginner traders, the brokerage platform will offer in-house training material to help you understand the basics and offer advanced trading strategies. The type of educational materials includes blogs, detailed tutorials, videos, webinars, and a community forum where users can discuss problems and solutions.

Risk management tools are a great feature for beginners to help reduce the size of potential losses and close orders before an account goes into a negative balance. In other words, risk management capabilities prevent traders from ending up owing to the brokerage.

Here is a table with notable risk management features from the top forex broker platforms:

Complicated interfaces are daunting for beginners already – but it’s even more important to have a clear outlay when dealing with complex and risky securities such as currencies. Ideally, best forex brokers for beginners support a clearly organised interface that doesn’t forego depth in features. The best way to assess personal suitability in forex brokers is to simply test out every feature and platform quality through a demo account.

It’s also ideal for a Forex brokers platform to support full functionality across products to ensure a seamless switch between devices. While many brokers now adopting a mobile-first approach, the degree to which services overlap still varies across outfits. If you prioritise being on top of your trades while on the go, seek trading platformsthat include all their offerings within the mobile application.

Demo accounts are crucial for beginner traders to understand ins and outs of forex trading, as well as the workings of the platform to assess whether it suits your experience and personal preferences. Trading with virtual money in a simulated market environment is a much less unnerving way to get acquainted with trading risky and complex securities like forex, and is important to utilise to minimise capital loss.

Commissions, spreads, and overnight swap charges concern the forex traders the most – and they vary by broker. The most common fees include;

• Commission: Forex brokers may charge a percentage fee for trading currencies, which tend to go lower as the trading volume increases. Yet, many brokerages now waive commissions following Robinhood’s tremendous success.

• Fixed spread: The fixed spread is beginner-friendly because it helps in accurate trade cost planning and protects against expensive trades. The catch is that it may lead to slippage and re-quotes if brokers use an instant execution model to offset the lost charges.

• Variable spread: Variable commission trades may result in a better deal, but the costs are unpredictable, especially in volatile markets.

The amount you need to start trading forex will depend on the minimum deposit and minimum trade size of your chosen broker. This could be as little as £100 or even £10 for some brokers. It makes sense to deposit a small amount to begin with while you get familiar with the platform.

Now let’s take a look at the Forex trading fees of the best forex brokers for beginners:

Forex is typically traded by banks, businesses, and retail traders, but the biggest price movers are central banks, news reports, market sentiment, credit ratings, and economic data. Traders should understand how to research and interpret these factors, and develop market acumen to make better-informed decisions.

Overall, FX trading is considered among the riskiest types of trading because of the high volatility compared with other trading forms. It is also important to have a substantial bankroll to ensure that losses can be absorbed without running out of money.

Currencies are traded in pairs in 3 different market types:

• Spot Forex Market: Spot trades refer to the exchange of currencies immediately as the transaction is confirmed or within a short period of time.

• Forward Forex Market: This trade type refers to the Forex trading of currencies at an agreed price at a future date or range of dates.

• Future Forex Market: This involves a contract that is legally binding to buy or sell a currency at a specific price and at a future date.

Most traders will not physically receive the currency they are trading. Instead, they are speculating on the irregular price movements of a currency pair.

While there is no centralised forex trading location, FX hubs exist that account for most trades. The biggest FX trading hubs in the world are the United States, the United Kingdom, Singapore, Hong Kong, and Japan.

Base currencies, quote currencies, and pairs

Currencies are traded in pairs with what is known as a base and quote currency. The base currency is the first currency listed, and the quote currency is the second one. When you buy a currency pair, you buy the base currency and sell the quote currency – when you sell a pair, you sell the base currency and buy the quote currency.

Each currency has a 3 letter code such as USD for the United States Dollar and GBP for British Pound Sterling and this trading pair would be expressed as USD/GBP, which involves buying British pounds and selling US dollars.

The rate for this transaction is 0.81, which means that for every US dollar sold, you would receive 0.81 British pounds. As currencies are bought and sold, the rate constantly changes.

Pips, lots, and margins

• Pip: A pip is the smallest price movement possible for an exchange rate, so bid/ask spreads are quoted in pips. The pip size varies based on the exchange rate and trade value.

• Lots: Buying and selling small amounts of currency is not practical; therefore lots exist. Lots are set prices for a batch that ranges from 100 to 100,000 units of currency.

• Margin: Through a margin account, you can borrow from the broker to increase your buying power. This magnifies the profits as well as the losses and should be used with caution.

• Major: These currencies are defined as those having the highest average trading volume such as the US dollar, Euro, British Pound, Japanese Yen, Swiss Franc, and New Zealand Dollar. Major currencies are typically liquid and stable, and come with very tight spreads, therefore most suitable for beginner traders.

• Minor: Pairs that don’t include US dollars are called minors. They come with slightly higher spreads and are usually slightly less liquid than majors.

• Exotic: These pairs include currencies from emerging markets. They exhibit the most volatility, come with much wider spreads, and are the least liquid in comparison.

While the totality of the FX market is highly volatile, the aforementioned major currency pairings show the least volatility in comparison. The more volatile pairings are often enticing for many traders as steep price swings create numerous trading opportunities and increase the scope to realise a profit – but that also increases the risk exposure by a landslide.

As a beginner, it's wise to stick with less volatile currencies until you are more acquainted with the market behaviour and have a greater understanding of what drives the price swings.

Forex markets are available for trading 24/7, but at certain times of the day, they have higher trading volumes. The biggest trading markets are in London, New York, Sydney and Tokyo, and they are in different time zones. Therefore, GBP currency pair trades will peak during London’s working hours.

However, the trading volume is highest when the working hours of several market hubs overlap. This is the time when you can expect the highest volatility levels and the difference between the bid and ask prices narrows.